Nearly 2 Million Californians’ Livelihoods Are At Risk

California is estimated to have nearly two million residents who choose to work independently – full-time or part-time. Statistics indicate that more and more Californians are choosing to work independently as their full-time career or for additional income to make ends meet.

Industries that commonly utilize independent contractors include real estate, healthcare, education, financial planning, agriculture, beauty, creative fields (filmmaking, editors, writers), technology development, insurance, construction, on-demand/gig and transportation. In addition, the  franchise business model is based on an independent contractor relationship between a franchisor and franchisee. California has over 76,000 franchise locations that support nearly 730,000 jobs.

On April 30, 2018,  the California Supreme Court overturned three decades of California employment law that allowed individuals to work as independent contractors. Instead, the court imposed far more restrictive criteria on workers which will create severe economic insecurity and hardship for Californians and nearly every industry in this state.

We need to protect our freedom to work independently!

California’s Modern Economy: The Growing Freelancer Economy

  • The top reasons that motivate individuals to pursue independent work include: 1) to be their own boss, 2) to choose when they work, 3) to choose their own projects, 4) to choose where they work and 5) to earn extra money.
  • Nearly half of all millennials (47 percent) across the U.S. freelance, which is a nine percent increase since 2014.
  • The Court decision moves the state backward and does not accurately reflect today’s realities. It would eliminate the choice that more and more Californians are making for their work and quality of life. In fact, 79 percent of independent contractors prefer it over traditional employment according to the Bureau of Labor Statistics Economic Release (June 7, 2018).
  • Economic stability is being redefined as 63 percent of freelancers increasingly think that a diversified portfolio of companies to contract with is more secure than working for one employer.
  • A majority of freelancers who left full-time traditional employment made more money within a year.
  • Full-time independent contractors are able to work less than 40 hours per week (on average 36 hours) and the majority believe they have the right amount of work.
  • Technology such as online platforms have also benefited brick and mortar businesses with significant increases in sales and expansion of their customer base. This has helped small businesses across the state not only survive but thrive.
  • With innovation expanding opportunities, more and more Californians are choosing to work independently full-time or to supplement their income.

Source: Freelancing in America 2017

Dynamex Court Decision: Massive Economic Instability and Upheaval

  • Since 1989, California courts and regulators applied a set of rules called the Borello test for deciding whether a worker was an independent contractor. This approach weighed nine different factors to account for the variety of California industries and professions that would be regulated.
  • Despite this test being used for over three decades, the California Supreme Court made a surprising and unprecedented departure in April 2018 by replacing these nine factors with a one-size-fits-all approach consisting of just three factors which are also far more restrictive.
  • This new test, called “ABC,” has never existed in any form of California law, either in statute or by regulation. The ABC test is the first time in U.S. history that such a test has been imposed by a court, without legislative approval, with three independently dispositive factors.

We Need the Legislature to Protect Californians Freedom & Choice

  • With our rapidly changing economy and how more Californians choose to work, we need the time to discuss and develop laws that best reflect today’s realities. The Court made its decision with limited information on a decade-old case. The Legislature has the ability to identify criteria for independent contractors that better reflects California’s economy and protects workers.
  • It is time to modernize our laws and have a robust discussion about worker protection and worker choices to reflect today’s realities.
  • The Legislature can take action now by suspending the application of the Dynamex decision to prevent massive economic instability for nearly two million Californians. Let’s work together to modernize our laws to protect workers and their choices.

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